The present invention relates to document verification systems and more particularly to a virtually fool-proof document verification system employing multiple cross-checks. The system may be used in connection with paper instruments, such as checks, security documents, ambassadors' pouches and the contents thereof, etc.
The fraudulent misuse of documents has, in the past, been limited only by the ingenuity of those attempting such misuse. In the case of payroll checks, blank checks may be stolen from an employer, completed, and presented for payment. Already-completed checks may also be illegally obtained either before or after distribution to a recipient. Although the frequency of such occurrences is low, when they do occur, the amount involved may be quite high, because the perpetrators are often professional criminals. The cost of guarding against the possibility of checks being stolen is high because of the extraordinary precautions which must be taken during handling and storage.
Government checks including welfare and social security checks present a particular and somewhat different problem. Recipients of government checks often have difficulty finding someone to cash their checks. Check cashing locations may be few in number, inconveniently located, and inordinately expensive in terms of the service fee charged. These types of checks quite often do not lend themselves to automatic deposit in financial institutions, particularly in the case of welfare checks, because the amounts involved are too small and the retention period of the funds is too short to encourage banks to establish demand deposit accounts (DDA) for welfare recipients. Retailers are often reluctant to cash government checks because of the risk of stolen, forged, or falsified checks, and because the checks may be returned as invalid at any time for a period of up to one year, which makes recovery all but impossible.
There are many check authorization programs currently in use, many of which are applied at the point of sale. In the best of cases, these may be based on a magnetic stripe identification card carried by an individual which is used to access a computer database either directly or through a data communications network. The database provides information regarding the eligibility of the individual to receive funds but has little or no capability of determining authenticity of the check being presented or the validity of the relationship between the individual and the check. The database would normally include check cashing parameters for the individual, such as size and frequency of check cashing privileges, and any one or a combination of several types of identifiers. Although such check authorization systems are loosely referred to as "check verification systems", this term is a misnomer in that the authenticity of the checks is not verified, rather the eligibility of the individuals is. Unlike paper checks, however, the individuals involved are of course not subject to the check clearing process or subject to return when fraud is discovered. Certainly, a visual verification of some sort may be made of the physical check such as looking for water-marked paper, unusual check numbering schemes, and foul-ups such as misspellings, illegibility and ink smudges. But professional and semi-professional criminals make few such mistakes.
When private check cashers such as currency exchanges cash checks, they look for obvious discrepancies, try to identify the individual (perhaps from past acquaintance) and then cash the check for a fee. Because validation, strictly speaking, is lacking or non-existent, the fee must be structured to allow for significant losses, and is often in the range of one to several dollars each for checks that may well be for a few hundred dollars or less. Whatever the fee is, it is a significant percentage of the face value of the check and is imposed on individuals whose options are few, if any. The truly needy and the legitimately entitled suffer not only from the acts of the dishonest, but also from the weakness of the system.
An object of the present invention, therefore, is to provide a more fool-proof document verification system. Another object of the present invention is to provide a document verification system having multiple cross-checks.